Value Props: Create a Product People Will Actually Buy

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Value props is one of the most important things that we could possibly spend time on because the number one reason that companies fail is because they're not solving a valuable enough problem and therefore they don't create the value that's worth investing in and therefore they fail in their basic form of meeting a need. So what we intend to do today is to both help you understand how to define the problem you're addressing or the opportunity you see, and then actually evaluate it, and then finally create it. And this is one of the few workshops where I will tell you that we do have an answer. Usually, you hear me say, "We there are no answers," and I'm going to ask a whole bunch of questions of you. The only answer I'm giving you, though, is a framework, and it's a framework for where we're going to go. So let me jump right in and get you there so you can hear exactly from the beginning how this framework, uh, set of activities is going to come together.

So as I said, first of all, we're going to define, then we're going to evaluate, then we're going to build. One of things I want to tell you right off the bat is that I want to get rid of the idea of "ideas." It's a terrible thing, but most people come to me and they say, "I've got an incredible idea for X, Y, and Z." Well, ideas are two a penny, sorry, I should say to a cent, um, but what they really are is free-floating. They don't actually have meaning until you can address some kind of a problem or opportunity with them. So that's why that first part is so important. And then, of course, once you start building a value proposition, we want to be able to evaluate it so you yourself, not me or anybody else, can judge whether you've got something that is really going to be compelling and cause people to buy. And finally, if you have, then of course you want to build it and get it into a form that's really crisp so it's an easy thing for you to do and everything from an elevator pitch to literally going to a full-on pitch, for example, to get a customer over the line or raise money. In every instance, though, this framework, a set of framework, should help you get there.

So I said we'd give you an answer. This is the end of the session. We want you to be able to actually build this framework and say, "For whom that is dissatisfied with what, due to some unmet need or problem, you offer a product that solves that, and it provides some key benefits that are compelling enough that people actually want to engage with you." So that's where we're headed this evening.

First thing in the value prop that we want to do is define. And the first statement sounds so obvious, which is "for whom." So I'm going to jump right in, 'cause I know that they've got a good starting point. Connected, Gulnaz, tell me, for whom is your value prop?

So this is, uh, Connected as a nonprofit. So we bridge the digital divide for people in Kazakhstan. Um, but we have to deliver, I feel like the value proposition for organizations that donate their computers and devices to us, and those who can fund us.

Okay, so you went a long way down into that. But I want to make sure we really understand the "who." So if you could say who it was for. Is it everybody in Kazakhstan? Uh, primarily children? Okay, so we want to say children. Okay. What else could you say about them? Um, from marginalized communities and rural areas in Kazakhstan. Okay, marginalized. What else? Uh, who don't have basic digital literacy skills. Okay, so basic digital literacy skills. And you said the last thing is, and they don't have equipment. And they don't have equipment.

So this is why I picked Gulnaz, because I've been lucky enough to have her in the class before. She didn't say, "My proposition is for everybody," which would be very terrifying if it was, by the way, because then you, how do you even pick where you go to market or how you reach that customer, etc. She's got very specific. I didn't write "Kazakhstan" because that's pretty obvious, but it's children with marginalized, um, who are in a marginalized situation, don't have basic digital literacy, and they don't have the equipment. Now we can find out later how she's going to address their needs, but that's pretty clear, right?

So anyway, one of the teams at the iLab who put their um value prop in for tonight was Compr Fasial, and they very openly said, "They've got a product which is going to help people who are dissatisfied with current credit products due to high interest rates." Get through a credit marketplace, better comparison capabilities. Makes total sense. But they didn't say "for whom." Now, that's a massive problem when you are building a business because if you don't know who your customer is, you don't know what the persona is that you're selling to and how to focus or target on them, etc. And it just is the beginning, therefore, of why the value proposition statement is so important. I will underline it by saying the following: If you don't know who your customer is and you think it's everybody, I can tell you you're going to fail by default because trying to boil the ocean and sell to the world at large is a very big, uh, undertaking for any company. Even the largest companies in the world get very crisp about it. Yeah.

And Tato, yeah, I had a question, and I think related to Gulnaz's business, um, if your user is different from your customer, who do you put on the "for whom"?

Great question. So, user versus customer. What do you think is the answer? First of all, Gulnaz, will answer. Anybody can answer. Does anybody in the room have an answer to this? This is a terrifically good question, by the way. This is the kind of thing that we really need to deal with, too.

Us, the user. Say more. Users. Why the user? Well, because the customer is just the person who's paying it, but the user is who's benefiting from what you...

Great. Now, does it mean it's one or the other, or are both important? Anybody else want to comment on this? Yes, go ahead.

I think when your user is not your customer, you actually have to satisfy two different value propositions. You have to provide value to the additional funder, whether that's philanthropy or government, but you also have to provide value to the user so you have uptake.

Okay, so this is really important. This, which is, I'll just use the word "pull." You need the pull from the user. If the user is not using it, nobody's going to pay for it. But even if the user is using it, the person who's going to pay for it, whether it's, you know, a government, if it's a nonprofit situation, or it's somebody in IT, for example, who's the gatekeeper for something, they still are going to need the user to convince them that there is a payoff that makes it worth them investing in this product or service. So both are important. But I really agree with Victor, by the way. You've got to start with the user. Like, if the user's just not getting the value from your value proposition, that's the whole point of this class. Then we're in the wrong place.

So this piece of definition is what we're trying to get to with the "who." And when you see, and by the way, I don't think we have it this semester, but the "Startup Secrets" class on go-to-market, which by the way, is on the iLab YouTube channel, you will see we talk about personas. And this is one of the things that we talk about is how do you get to all parts of the persona that is going to be the, uh, champion for your product or service in whatever enterprise or government or, uh, nonprofit that you're selling to. So very important question. Thank you very much for that. Any other questions on "who" before we move on?

All right, good. The key word here is ultimately "segment." So if we're not going to sell to everybody, we need to find a segment of people that we're going to sell to. And the trick of this is actually in your workbook. So I'm not going to pitch it to you tonight because it's a significant thing to go and spend some time looking at. And that is to define your minimum viable segment. I'll just define it for you as simply as this, which is to say, you're all going to get to learn about building the smallest product you possibly can, your MVP. And if the whole market out there, the whole world, was where you went and targeted that, then this would very quickly get pulled in all sorts of different directions for all the potential users that could use your product or service, and they all have different needs. The MVS simply says you want to find one path where you get the same needs for the same users that allows you to sell the same product over and over and over and over and over again without you having to change the product. You can learn a lot more about that in the workbook, but that's the notion of a segment. And if you do this right, then you end up with a minimum viable segment, which is a good dance partner, as I call it, to your minimum viable product.

Now, does anybody in the room not know what these two terms are? Because they are terms that have been built in startup legacy for the last decade or so. Uh, but it doesn't mean to say everybody knows them. Anybody have any questions on those?

All right, good. So only secret I want to give you here is one simple one, which is you want to evaluate this part of your, uh, who you're selling to through the eyes of the customer. So we talked about who this is. Let's just focus on the user. If the user can identify with the product you're selling, you're on the right track. And what's the best way to find that out? What's that?

I said, ask.

Yeah, absolutely. All of you can do this without spending a single penny. Just go out and talk to them. And if you're not clear that your user is identifying, when you talk to them, with what you're trying to sell them, they say, "Well, oh, that's not me. I don't buy that," or "I don't need that," or "That's not a problem I identify with." Keep asking until you find the person who says, "Oh, yeah, that's the problem I have." And keep asking until they say, "Not only do I have it, but then that's where we'll start to get into more of the value proposition, but it's the pain there is big enough for me to actually start to engage with you." But everything you do should be looked at from your user's eyes, not from yours. In other words, don't pitch them anything, ask them everything. Makes sense? I see a lot of nodding heads. Good. All pretty obvious.

So now that we've, we've talked about defining who it's for, we're going to define what we're going to solve for them. What problem we're going to define for them. So there's a famous statement here, and it's one of my favorites, which is, "A problem well stated is half solved." And the reason that's true is that if you can really clearly identify what the pain or need or opportunity is that you're going to address, it becomes very easy to start getting your team to focus on, "Well, what product or service will you build?" But imagine if you get in the room and the opposite is true. There's five engineers you've hired, for argument's sake, or, uh, five people you're working on a service, building a service for, and you can't even agree what it is you're building. And or if you didn't do the first part, who you're building it for. That's where a lot of startups go wrong, by the way, is they can't get that crisp to say, "We need to solve this particular pain point, this hair-on-fire pain point for people first."

So now the question is, what's the best way to go about doing that? Here are a few frameworks for you. First of all, this one is a very simple one. It's for use. Think about problems that are unworkable, unavoidable, urgent, and underserved. So those of you with boards, I'm going to recommend you put up just four U's and just take a moment to think about, as you are thinking about, for example, Vivian framing your idea, what about it is unworkable, unavoidable, and, uh, undeserved, and urgent? And I'm going to take you through each of these. I just want you to capture the four U's on your board. So Celine, if you do the, I'm sorry, Stellar, if you do the same for Celine Health, just put them up on the board for the moment. Just want to get us used to kind of creating the basis for what we're going to go through. And you're all going to build out your value propositions on your board. So just to be clear, so, um, the only person I didn't meet is Sharon. Hi, welcome. Good to have you here. Um, I know you, I know you're building a new kind of bike seat. Can you just tell us what it's about?

Yeah, um, I do not yet have a name, hence just the word "bike seat." But, um, I'm specifically looking at solving the problem of some of the long-term health issues that are caused through for women through biking. And I'm doing that through looking at how to design a bike seat that reduces pressure and friction.

That's perfect. I don't even need to go any further. So I'm going to just ask you to put up these four U's and tell me why, in your own words, for the moment, just one example of something that you think is either unworkable, unavoidable, or urgent, or undeserved. You don't need to tell me right away, but I'm going to take you these frameworks and I'll come back to you. So I'm giving you, uh, heads up that I'll come back to you and ask you. Great. Now that you've got these, let me take you through them.

So "unworkable" is sort of obvious, but it's really interesting. Some people think they've got an unworkable problem, but the real definition of something that's unworkable is that it is going to cause a problem that when this happens, the consequences are so great that somebody could get fired for it. So let me give you an example because it's a very interesting one, and you might have all lived through it. So when the iPhone first got introduced, people were lining up to buy them. That was the great news. The bad news was when they got them, they couldn't get them activated. And worse still, when they did get them activated, all the iCloud services to do things like download their contacts and their calendars weren't working either. So that problem was so bad, so unworkable, a lot of people got fired. In fact, Steve Jobs was famously on a tirade about it. And it was a problem that was created by a brand new technology in a mass market, and with a lot of people that obviously were very unhappy about it. And today, guess what? When you buy an iPhone, it's pre-provisioned. You already have all of that worked out. And that took years, actually, to figure out. I happen to be one of the investors in a company that solved that problem for the carriers on the other side of this, like AT&T. It was worth tens of millions of dollars just fixing that workflow and making it possible for you to just pick up an iPhone and turn it on and effectively get your new number working.

So these unworkable problems do get people fired. They're that painful and they cause all sorts of things. Now, ideally, they're much more interesting than that. So, for example, you've got social problems where you've got things that are causing people to get sick, or for example, not able to get education, or like Connected, not able to get the right resources that will help them in a desperate situation. Then that also is unworkable. You will have your own way of saying it. Gulnaz, would you say what you think is unworkable about Connected?

Uh, if I understand it correctly, if so, if we teach digital literacy skills that kids cannot use, yeah, that's useless, kind of.

Well, no, let's put it the other way around. What happens if you don't solve the problem?

Oh, if we don't solve the problem, so we are trying to close a socioeconomic gap in Kazakhstan that is also caused by, um, educational inequality.

Okay, but what if, what happens in Kazakhstan if we don't solve the socioeconomic gap? What happens to Kazakhstan?

Yeah, I mean, the one example is like people protested this year, and there was like a huge wave of unhappy people.

Great. So, I mean, this, it's, it's important. And I want to make sure that we give you airtime for this. Not every problem that comes through the iLab is a problem that's technology, like the iPhones not getting to to work. It can be a social problem. Like this is a really big challenge for a nation that's trying to develop its people, that they can't get the education and the resources they need. It causes huge unrest, great unhappiness. And guess what? That population is not going to get out of their third-world status unless they get the education they need. This is a really unworkable problem. This is one of the biggest problems of our time is that we have huge social divide. So thank you for addressing it and thanks for taking that mission up. That's an example of an unworkable problem.

Anybody got any questions or an idea of where their particular thing is unworkable today? So, uh, I don't know whether, let's see, who have I not talked to so far? Uh, cohort, is there anything about what you're doing that's unworkable?

We're looking largely at the improving the graduation rates for black students, right?

What happens if we don't do that? If we don't do this, 20% of, um, students won't graduate from high school.

Okay, so, yeah, I, I don't even need to say any more than that. That's a big problem. 20% of students. Have you got the data on that already? Can you show that, show that with to people?

Yes, it's public data.

Ref, yeah. So you're in a great place because you're already starting the problem that's unworkable. You can give data behind it, and there are real consequences for that, which is again, inequality in our society through not being able to educate people. Interesting enough, you guys should be talking about how do you connect Ed and yourselves about how do you make sure that your value prop comes to life in that way. But thank you for sharing that. Anybody got any, yeah, go ahead, Vivian.

I have a question. Sure. Facebook, for instance, what unworkable problem did they solve?

So the good news about this is, you asked what will open up a whole thread here. There's B2B versus B2C, and Facebook is obviously very much a B2C company. And they are very different sets of problems. When you start talking about B2C, generally speaking, they're not about unworkable or unavoidable. They're much more about what we'll talk about, which is latent problems that are aspirational and that ultimately become blatant and critical. So we're going to get there, but don't, don't worry, it's coming up.

Any other questions on "unworkable" first? Yeah, go ahead.

How do you know that you're not actually hypothesizing that this is unworkable? Because I can give an example, but a lot of times what you think is unworkable could just be something else. And I'll go ahead and give an example just to contextualize that. For example, oral cancer. If you think that, oh, you may just need to raise awareness, but the problem may not be related to awareness. The problem may be related to access of care. There's lack of access. So you could say, "You know, what's unworkable is that there's no awareness," and you would be claiming patients. But in fact, there's just lack of care, access to care.

So, yeah, you answered your own question, by the way, which is great. Uh, because you said, quite rightly, it might be this, or it might be that. And so what would you do? You'd keep drilling on the question you asked yourself until you found what is the root cause of it. And so, honest answer is, many times the reason customers, sorry, um, startups fail is because they don't do what you were doing, which is to say, "Well, it could be this, it could be that." Who should you go to to ask the question? It's on the board. Our customers, obviously. Yeah. Just go and ask the user. Okay, tell me what the real problem is here. Tell me what's at the root of this. Is it lack of awareness, or is it lack of availability, or is it my inability to use the product or the service, or whatever it might be? Does that make sense? Again, the answer is going to be so obvious when I say it. 90% of the time, it's going to be back to what I said here, which is, "Ask the user. Get to the customer's viewpoint of this, and let them tell you where their pain is, what the problem is, and why they're not being able to get the solution to it." Sounds so obvious, but the more you do that, the better, uh, better off your value propositions get defined.

All right, so next to you, "unavoidable." The good news is that everybody in this room faces two completely unavoidable things. What are they?

Know, tax and death.

Taxes and death. Absolutely right. One of the joys about our lives is that it, it does eventually have to come to an end. Uh, and so taxes and death, or I put it a bit more graciously, aging, are part of the reality of our lives. But guess what? Because of that, there's a whole lot of money that gets made in both those industries. Like the aging and the care that goes around that is a huge industry. Likewise, paying tax is a massive industry. And I'm not just talking about QuickBooks and TurboTax and all those things that that help out with that. Um, it's actually a whole accounting industry that is spawned as a result of the fact that we have to pay taxes, we have to account for what we spend, and we have to do all the things that relate to that.

So why, like this unavoidable part, is there are actually a lot of things that are, that are not so obvious, right up to, to your point earlier, uh, at the, at the sort of outset, that seem unavoidable until you start to dig and you think about, "Actually, you know what? I do need to get my kids educated." Because if I don't get them educated, they're not going to be able to pay for themselves and get, you know, self-sufficient and be able to go and build their own lives, etc. And so, guess what? Education's pretty much unavoidable too. So, you know, both of you have good, uh, uh, basis to talk about that. It's un, it's unavoidable also for almost all societies to address that issue at some level if they're going to be socially and, sorry, economically viable. Uh, and so governments do care about it. So again, you can get these things to work for you if you can find the right ways to address them.

Now, one of the other things I always love to do here is give an example that is pretty obvious. But how many of you have had COVID at one point? It was pretty unavoidable, right? Well, what did we do? We all went, got vaccinated. Well, maybe not everybody. There was a choice. But the point is, some health things are also unavoidable. Uh, and some challenges like that are unavoidable, and they give rise to all sorts of opportunities. Some of you are even wearing masks in here. Totally appropriate. Guess what? That's a whole business that didn't exist beforehand. And don't just think about the mask. Think about every piece of the supply chain that builds a mask. It's a huge business that have came up. Now we have testing. Testing has become a huge business because of COVID, etc., etc. So you see where I'm going with this. It's not necessarily something that you face immediately and say, "Oh, that's unavoidable," but when you start to think about all the implications of it, then you realize there's lots of businesses that come out of it.

Okay, this one is easy, "urgent." So, um, I do actually want to get another group involved here. So Space Health, Midori, tell me a little bit about what your business is or your idea isn't, and why it might be urgent.

Okay, yeah, thank you. Um, Space Health has a goal of, uh, providing the commercial space sector with medical professionals for the future, just with the expectancy that, um, this industry is going to blow up and, you know, people that are going to space for space tourism are going to need medicine in space.

Very cool. Now, I'm going to challenge you though, is that urgent? Like, does everybody in this room feel like they are going to need health as one of the first things that they spend money on in space? I mean, health in space, right? Um, at least not now.

Okay, so, and I'm not trying to take your idea down, but it's one of the most important criteria to think about. Now, let's just challenge that for a second and say, but to your point, anybody's going to space. So that's the space user, the customer, if you like, who's going out to space. I'm sure they feel like they want to track their health before they go, and they're going to need health and, uh, safety when they're up there. So I'll eat my words and say, if you can find the right user, if you can get in touch with whether it's the space agencies or the people who are actually, you know, doing the experimentation up there, I'm sure there's a tremendous opportunity for Space Health. So this is where parts of the value prop need to tie together. And so you've got a tremendous opportunity if you can pick that segment, that's the "for whom," that really clearly sees this as urgent, and I'm sure they will. So thanks for sharing.

Okay, so what is a tip here for all of you is the following: Urgency is all relative. So for those of you not going to space, you could care less about this, right? So relatively, for you, it's not important. Now, let's take a reality in business, which is, if you're selling to somebody, whether you intend to or not, you're going to compete with something or somebody, and their time. So lots of you will think you've got a unique solution, but here's the bad news: there is a finite amount of time, money, and resource, people, and everything else that goes around what you're trying to sell into. So you're always going to have to be something that is at the highest priority if you're going to get people's attention, because guess what? They won't spend time with you otherwise. So it's no good, for example, trying to sell a low-income family, uh, a very high-def television set when they haven't even got the basics of their food and water running, or they aren't educating their family. It's just obvious when I say that. Well, it's the same in true in business, too. If you're going to try and pitch somebody something, for example, that's a "nice to have" new extension, for example, to their, uh, existing workflow system, but they haven't got basic security in place and they've just been hacked, you're not going to get any attention. So you have to think about what their priorities are.

Now, what's the best way to find this out? Ask. Ask. We're back to the same old question. Now, I'll give you a little clue here. What you want to do here is say, rather than even introduce what you do, whenever you talk to your potential user or customer, ask them what their number one priority is right now. Don't ask them about, or don't tell them anything about you. Just say, "What's your number one priority? If you get up in the morning tomorrow, what's the number one thing you need to focus on and why?" And then, if they tell you, say, "When do you think you're going to get to number two?" And then let them tell you number two. Often times, they won't even get to number two. What you'll find out is that there's some pain point that they really have that's really so compelling, that's what they're focused on. And obviously, if you can address that, you're in a good spot. If you can't, expect to get delayed and to get deprioritized and to be spending time waiting to get engaged on your value problem. So that's why "urgent" is so important.

Now, let me give you another startup secret, which is pretty obvious, which is that sometimes certain shifts in the market create urgency. So a good example right now is, how many of you have mobile phones? Duh, all of you. But if I'd asked that question 20 years ago, it would be none of you. That shift has been totally dramatic. So what has it done to every industry? It's created urgency for people to respond to it. Where do you bank today? Using your phone. Pretty obvious. You don't need to go to a bank for most of the things, 'cause you can do it all on your phone. Again, 20 years ago, that wasn't the case. And so banks had a very, very urgent response that they had to come up with to be able to make it possible for all the users that now said, "I don't want to go to a bank and deal with a teller, I just want to do it on my phone." And the first banks that moved there were actually not the existing incumbents. There were a lot of new banks that got started as a result of that trend. So you want to look for shifts that create urgency. Things like mobile. I'll tell you, there's another major one that's going on right now, which is AI. AI is going to be involved in everything. And so everybody's scrambling to figure out, well, how do I engage AI to make my process more effective, more efficient, and save time and money for people? So urgency can be something that you also ride based on shifts in the marketplaces.

So I'm going to ask, because I don't know anything about it, what is CRSP Design?

Essentially, we make low-cost, so affordable robotics toys, um, for children, starting out in South Africa. And, uh, to use the framework that we've got up here, why is that urgent?

So when the idea originally started was a personal problem I had 20 years ago when I was a child, and I wanted to get into the space, but growing up in a low-income family, nothing was affordable enough to be able to, like, for me to access it. And then, um, now, if you fast forward to like 2010, 2015, the world was moving towards the fourth Industrial Revolution, and specifically for Africa, we were lagging behind. So this was an urgent, like, issue for me personally, being an engineer at the time, realizing that our schooling systems weren't actually solving for this. And I think we also went forward to creating a sense of urgency by helping the government create a curriculum for this. So what this eventually did is now schools have started scrambling, looking for resources exactly like this.

So there are times when, as the startup, you can actually identify the problem before the users even, I don't know, know they have it, and then push forward policy or whatever that then creates a new market. Then the issue becomes, how do you capture value?

Okay, so we will, I'll hold that thought because I call that a latent need to, to a framework that comes up later. And it's interesting that the way you described it, too. But I would say that's, you're going to be challenged with exactly the thing that I'm describing, which is, how do you get people to say, "This is more important than 10 other things that we could be spending our resources on?" Do you agree?

Yeah. So that's why the "urgent" piece is so important.

All right, last U is "underserved." And this one is pretty obvious. I already gave it away. There's only finite time, money, and resources for you to be able to engage on things. And so you have to help people understand why they should prioritize you. But the underserved piece is an interesting thing, particularly in B2C marketplaces. So anybody got a B2C value proposition in here? They're selling to consumers? Yeah, of course you do. Taste of Kenya. So tell me about what you think's underserved in the market for, uh, tea?

Well, it's a coffee market, right, essentially? Yeah. So at the moment, Kenyan coffee consumers can't afford the Kenyan products in the market. So they buy instant coffee, which is from Brazil. So none of Kenyan coffee consumers who are low income can afford the coffee that's being sold in the market.

So actually, the beauty of your solution is not only is it underserved in that people can't get the coffee from their own local market, but it's also too expensive. So you've got two problems that you're addressing. Um, you know, both a pain, it's unworkable for people who can't afford it, and it's underserved in the sense that literally there's no supply for it at the moment, which is great. Thank you, Zapora.

So now that you've all heard the four U's, I want you to just take a moment in your group and put down the four U's and take a moment, for example, on "Taste of Kenya," and put what one criteria is that you think, we just gave you two, makes your product unworkable, unavoidable, urgent, and undeserved. Let's take a few minutes on that in each group.

Almost everybody's come up with some four U's, if not all of the four U's. I only have to look around the boards to see that. So, um, I'm going to just take one or two boards and just ask, uh, for the rest of you to volunteer. So first of all, I was lucky enough to listen to Celine Health and Stella. And Scarlet, you're serving a, um, a market for women who obviously have an unavoidable problem. Stella and Scarlet, do you want to just talk about that?

Sure. So Celine Health is going to provide personalized menopause management for mid-age women, or whoever enters, uh, menopause, even though they enter it early. So the unworkable part is that when the climacteric symptom hits, like hot flashes, night sweats, and it hits, it just really decreased their functionality, like among this woman. So they cannot work. Our solution can help them work.

That's perfect. And unavoidable. Menopause is just unavoidable. Every, like, half of this room is going to enter that part of what we were talking about earlier, aging. It's just a reality for women. Yeah.

Urgent. Just when the symptoms hit, when you're not feeling comfortable, it is urgent that you, it's just like you get a flu and you need to take medicine or you need to do something. You stop going to work. So that is an urgent problem you need to fix. Right.

And underserved. So currently, if you search online to find articles or research dedicated to pregnancy, this age, you have so many million, billions of results coming out. But for menopausal age, this population, you find barely, like, 100, like, one in a hundred of them. Yeah, that little. So only 2% of the research funding are devoted to this population. So this population is underserved.

Thank you very much. So I had no idea about any of that. Although, without revealing who it is in my family, I have somebody in my family who would say this is really a critical issue. And it does cause her to be literally unable to function at certain periods of time, and there's way too little information about it and way too few solutions around it. And many women go through this. So all those four U's felt very real to me as I was listening to that. And I see a lot of women in here who are nodding their heads around it. So congratulations on finding such a great four U problem.

All right, just because of time, I don't want to go around and do every board. There's too many boards here, but I would love to give anybody a chance who had an, to say, who had an "aha" moment. I know you guys did, for example. But I want you to volunteer. Anybody have an "aha" moment when they were going through their four U's and care to share? Yep, go ahead.

So Hannah just left. But, um, interestingly enough, we started off with a bit of a debate. And it turns out with some ideas. And I think with our one, it could maybe be solved by just having a new policy in place, not even having a business or a startup. You know, so in those cases, I don't know what that means in terms of the problem you're solving. Um, is it one, if it's too social-focused that you actually can't solve it as a business, and you're better off joining government and lobbying internally?

Well, that's a big "aha," by the way. So, one of the things that I always want to say when I mentor at the iLab is, don't be afraid to recognize that what you're trying to do is not a good thing to do. Really, seriously, because you, you know, this is your life, so you don't want to spend it on something that's not a real problem that you can solve as a startup. And so what you just identified, I think, is a great example of that. You might realize that actually, this is a problem that needs to be solved in government first, with policy. So I actually want to give you a round of applause for being that honest about it. I think that's huge. That was a big "aha."

Anybody else want to share an "aha"? We'll do one more. Michel, we go. Yeah, go ahead.

Dan, for TerfFlow. It's, it's a software that helps pharmaceutical companies understand why the same drug works in some patients, but not in others. So normally, when I talk about Terf, I talk about like cancer and the need to get the right drugs to the right patients. But I think really, the problem we're trying to solve is that usually our client is a scientist that has kind of stuck their head out by convincing the pharma to fund this expensive clinical trial. And they have an unavoidable problem because they have to prove to their vice president that this experiment was worth it. And what our software does is basically provide a very clear, interpretable report that shows to other stakeholders that what they're doing is important. And if they didn't, how much money would they lose, potentially?

Well, if, if the drug fails to go to market because they didn't discover the right biomarkers, it would be billions.

There you go. So this is what we want to try to do. And thank you, Dan. That was a brilliant example. Is we want to try to identify the problem in a way that your user or your buyer is going to say, "Well, of course I need to do this. If I don't do this, I'm going to lose billions. My drug may not get to market because I can't even identify the right biomarkers." Now you're going to get people's attention. Now you're going to build something that is compelling, that causes people to act and want to buy. That's why these four U's are so important. Great example.

All right, uh, next framework is a fun one. It's actually one of my favorites because, um, it addresses this question that came up with B2C. So I think it was you, Vivian, and you asked about Facebook. So how many of you use Facebook or any of its derivatives like Instagram or WhatsApp?

Good. Pretty much everybody. Now, if I was to say to you, why? I would argue that every one of you has what some people call Maslow's Hierarchy of Needs, or some other, you know, form of it. Social needs, security needs, physical needs, emotional needs, you know, economic needs, etc. These are all needs we have. And basically, if we don't have them met, we end up in a bad place. So what is it that Facebook addresses for us? What need is it?

Connection.

People. Connection. People. It's a huge need. Do you know what the number one cause of unhappiness in the world is? Loneliness. The number one finding of the longest study at Harvard, ever since 1938, of happiness is one thing: connection. When people have social connection, they are happier. So this is a very big need that's what Facebook addresses. And by the way, social networks in general address.

Now, there's lots of other things to do. I always joke about it on the other side, which is, you know, guess what? We all want to meet people and date and eventually, you know, find somebody to partner with and get married, have kids, whatever it is. Not all, but generally speaking, that's a huge need. So that's why things like Bumble took off, or at the other extreme, why Facebook in the first place took off, because people just wanted to connect, to get together on, on, uh, different things that they had similar interests around. Huge, huge things build from that. So anyway, B2C, if that makes sense. Different approach, different framework, but similar principle. At some point, it becomes unworkable for people, for example, that are in, you know, foreign nations to stay in touch with their families back home without a social network. WhatsApp took off for that very reason. Way too expensive to pick up the phone and call home. Tremendously cheap to do it on WhatsApp for free, basically. That's why it took off. That was actually a critical need for people. There are whole industries that have built on that. For example, financial services in the third world is still incredibly expensive to do things like do basic payments and send money around the place. But on social networks, Weibo and Tencent in China, for example, that was enabling of that, uh, and solving of that problem.

All right, so I have an example here that brings it all together, and hopefully, it will be a useful one for you to see because it's sort of B2B and it's sort of B2C. Has anybody used Rent the Runway? It was a Harvard startup. So, yeah, a couple of you have. Okay. Just because you've talked, Vivian, let me ask this young lady at the back. Why do you use Rent the Runway?

I used it once, like 10 years ago, because I was going to, I forget what event in DC, and it was easy. And I knew I would never need to wear that, like, whatever I wore, I knew I would take a lot of pictures in and not want to wear it again.

Okay, great. So for you, at the moment, it was urgent in that moment. You had to go to this event. Vivian, why did you use it?

Same. I am a foreigner. I have basic clothes with me in the States only. And as I can see, as you can see, and I was invited for like a nice event, and I could, I didn't show up in my ex-boyfriend hoodie. Actually, I think you should have done it. It would have been a real winner. Uh, but that's a whole another story.

So this is a fun story. And for those of you who don't, his name is N. That particular garment should go on Rent the Runway. That would make a lot of money. All right. So the thing is, this is a good example of something that sort of crosses between B2B and B2C in lots of different regards. So, um, Rent the Runway, in many ways, is unworkable. It's an unworkable problem for people who can't afford to go and find a dress or or an outfit or something for a particular occasion which they're going to go to. Sometimes it's a basic thing like a graduation party, and they want to show up. It's also underserved in the sense that people can't afford to get access to those things, let alone, uh, you know, do it for one particular thing. And it's really interesting, by the way, it's unavoidable for certain people who feel like they've got to show up, not in their boyfriend's hoodie, but actually looking smart for their parents, for example, when they're going to an event. Uh, there's so many reasons why this is something that just was underserved as a result, because the only pro alternative solution to it was going and spending a lot of money on a one-off basis that just made it completely unworkable.

So anyway, lots of views about Rent the Runway. And one of the things that's interesting about it, by the way, is it's really struggled as a business despite that. And that's because its business model is tough. And that's why we did the session last time. So working with with a great value prop is not the only part of a business that's important. It's one part of it. If you can't make it economically viable, which is what we talked about last session, it's still not going to be sustainable. So that's how to think about these two.

Workshops that we just did last time and this time together. The second thing I promised to do was to talk a little bit about the U uh latent need that you brought up. So there are often times needs that start out as latent, meaning people don't think about them day-to-day, they're not like at the top of their mind, and aspirational. We just gave you an example, which is a latent need is to look good. You don't necessarily think of it every day, but you do want to get up and feel good. And it's aspirational also in the sense that when you're looking good and feeling good, guess what? You can probably feel like more confident to do your job or your work, or you know, play your sport, or whatever else it is.

But certain needs evolve to becoming really critical and blatantly so. So let's take an example. How many of you have an iPad? Do you think that's blatantly critical or is it latent and aspirational? Critical. Tell me more. Tell me more. I need it right now. Yeah, for this session. Okay, so it's turned into your main thing that you take notes and everything else with, right? Yeah. Okay, good. So there are people, by the way, who have the other extreme. Anybody here feel like they're on the, "I just use it when I need to to watch a movie or whatever"? Interestingly enough, I had an iPad for a long time, then I wasn't using it that much. I got to Harvard, and then I was like, "Oh snap, I need a new one because everyone is using it." Then I got into HBS classes, and they're like, "No technology allowed." So I sent back the one I just bought. So it went from like, it wasn't critical, then it was critical, then I didn't need it anymore.

Well, let me, let me tell you why I use the iPad as an example because there's a vast array of people use them for a lot of different things. And some people would say, "Yeah, kind of, it's nice." And other people would say, "No, I got to have it." And when it was first announced, people joked about the name and they said, "Oh, it's just a big iPhone. Why would I want one of those?" Um, and it really didn't take off for a long time until people started building applications for it, and they became really critical for certain people. So, for example, if you're a pilot today, you might use this for navigation. And trust me, it's critical. It's not like you're not going to take it with you. This is what you use to make sure you're going to get home. So it depends on the application. It's also true in medicine, for example, that it's become critical in certain situations where it's too difficult to use a keyboard and people just need to write and they just want to, for example, touch something to actually activate a particular function in an operating room. So it depends on the application.

So what I try to say about this framework is as follows: Try to understand your use case. Is it something people think is just, "Ah, nice to have," or is it really critical? And if you can identify the difference between something that's nice to have and must have, guess which one you want to be in? Duh, you want to be in the top right there. But again, ask your user. Find out what they're doing with it. If the iPad had never made its way into medicine or, you know, flight, uh, navigation, all those other critical applications, probably wouldn't have taken off. But it's made its way into a lot of those things. And then for some users in the B2C class, they critically consider this their entertainment. To be like, "I got to have entertainment. This is a super important thing to me. I don't need a television. I'll just have an iPad." And there are people who've gone to YouTube as their basis for education, I mean, for entertainment. So that's their interface for it. Anyway, fun, fun thing for you to play with. I encourage you to put your diagram out there and when you talk to users, map where they're telling you they are. Ask them how critical this is. What else is a priority instead? What else would they do to what they spend their money on if it's not on what you're offering them? Any questions on that before I move on?

Yeah, Victor, just following up on that. Um, when they built the iPad, they didn't know they are going to need to build that many applications on it, right? Yeah. So they didn't really solve a critical problem at the time of building the, the application. So how would you think about, um, if you have the chicken first or the egg first?

So let's take a moment to, to answer Victor's question because it's a very important one, which is, you know, the chicken and egg question comes up a lot. So you've got an idea and you think there's some opportunity out here in the market. I realize I've just drawn the same diagram I've drawn above, but anyway, it's starting fresh. The answer is that one of the most amazing things about Steve Jobs is he was somebody that people said, "Never talk to users." He's famous for it. Like it was his idea to come up with the iPad. But what he was brilliant at was identifying he had great vision for what this thing could be. And then he built the important piece, which is a whole business opportunity for many markets, which is a platform that said, "Anybody in here can take my device here, use my platform, and build the application they particularly need." And so guess what? Hundreds, then thousands, then tens of thousands, now millions of applications have been built for that platform. And this is a business model that is really fascinating and a whole study in itself that we could get into. It's a very viable way to build products. What it really says is as follows: You've got to make this platform easy enough for your idea to be adopted by the users and to solve their own problem. For example, remember in the last session, I told you that open source works this way. It says that anybody can take the code that you offer, for example, to create, and I mentioned websites in Acquia and Drupal, the idea of a website and extend it any way they want to make their website capable of integrating Instagram at one extreme and at the other extreme, Salesforce, to be able to do things like give people a great experience when they go to the Grammys and take photographs and upload them to the site. And at the other extreme, have a close relationship with all those customers so they can keep selling them other things like records and merchandise and everything else. That is a whole industry now, experience management. And it was built on a platform, an open source platform, just like the iPad was an open platform for people to develop applications.

A counter example would be Pebble, right? They came up with smart. And now they, so great. So what was wrong with Pebble? Anybody know this, this particular product? Well, you do. So what, what do you think was wrong with it? I don't know. I think it fits the framework. It answers all the used and black and white question. But then really, was it urgent? Is it as urgent as an Apple Watch? What was it? Open? I think it runs Android. So very interesting. I, I don't want to get drawn into this too much, but I will tell you, I wrote an article, you can find it on LinkedIn. When I bought my first Apple Watch, I offered it to anybody who wanted to tell me why there was a reason to keep it, because I didn't think there was a need for it. It actually was a useless gadget when it first came out. It was like, it didn't even stay on. I had to do this to be able to look at the time. I mean, it was like, and there were no applications for it to speak of. So I think it was a bit like the Pebble. And what worked was that they had a development platform again, and they had a large developer user base who started to create applications. Now, there's no way I would give up my Apple Watch. Uh, it's now used for some critical things like my health. I monitor my sleep with it, all sorts of other things, my blood pressure, all sorts of things. So it's become critical to me. And by the way, actually, for timekeeping, which is a big part of my job that I need to get back on time, it is actually the thing that keeps me on time.

So with that, I, I'll just simply say, let's talk afterwards because it's a great discussion. Like a lot of things, there aren't answers, but there are questions you could ask in the frameworks that would reveal to you why Pebble would be successful and why Apple Watch, sorry, wasn't successful and why Apple Watch was successful. Some of which, by the way, is marketing too. All right.

When you start building your product, there are a whole set of things that are basically dependencies that you want to be aware of. And I talk about this in the workbook because you need to get a couple of concepts clear. And they basically are how your product actually fits into the solution that a customer has. And so, um, I will say it, and then you can go and look in the workbook. The first concept is that your product is very unlikely to be the whole solution that a customer has. And, uh, we started talking about smartphones, so I'll just give you an example. Why is a smartphone its own, not a whole product? What, what do you need with a smartphone to make it useful? Go ahead. Apps. Apps. Yeah. What else? Network. Yeah, absolutely. It's absolutely useless unless you have a carrier and unless you have some apps for it. Although I'd say one of the apps is built in, which is the phone. But the point is that almost every product, if you look at it, has some aspects of it that need to make it a whole solution for the customer. So that's the first concept you'll find in the workbook.

The second one is, once you realize that, you realize, well, actually, you have dependencies on your product being successful. Like, if there weren't networks, and I gave you the example that when the phones couldn't be provisioned on networks, they were just bricks, they were useless. Or if you don't have the app that solves your particular problem, it's also useless to you. So what you want to do is figure out what are those dependencies, those external factors that you need to work with in order for your product to meet the needs end-to-end, the solution, if you will. And if you don't pay attention to those, again, you'll be selling something that can't really solve the problem that you're trying to address. So it's in the workbook. You can go look it up. There's some examples, including Apple Pay, which is quite a fun one, and also Tesla, which is another fun one, uh, which is still to this day having a big dependency on charging stations and the availability of electrical, you know, uh, access for people to really say, "Oh, I'm definitely going to buy a Tesla." I know lots of people who won't because they just know they can't rely on it. So debt is an important thing to think about.

Next up is what we want to make sure happens in a positive way for you, which is how do you make sure you really do cut through the noise? So every startup I know will say that they are some way faster, better, cheaper. You're all nodding your head. So, and I'm sure that that's true for a lot of your things. So, uh, anybody think that they are not faster, better, or cheaper is probably not in this room. They probably like decided, "Oh, I'm really not in the right place." David, you're having a good laugh about this. So, are you working on something that you think is faster, better, cheaper? Absolutely. Tell me more about it. We're going to help get beyond this, by the way. So I'm in the, the travel space. So what I'm doing is I'm developing, um, an app that would help customers, um, find outrageously cheap airfares. We're dealing with, um, at least, you know, I mean, it could vary, but 30 to 90% off.

Okay, good. I'm going to hold that for a second. Is there any other thing about it that's, uh, that's better? Because you said cheaper, basically. But is it better because it's faster or it's, um? So that would probably be the, um, the tech behind it, right? The sauce behind it, I would call it. But to the customer, is there any reason why they say, "Oh, this, this is way better. It's a better experience. Is it easier than Travelocity or, you know, pick your?" So it, it works in a totally different form. So basically, um, the customer tells me where they want to leave from. Yep. But they're never tell me where, where they want to go to necessarily. So this is, this sounds interesting. I'm just going to put it, destination-less. Okay, that's definitely different.

By the end of this class, I want you to come up and tell me whether we can get rid of faster, better, cheaper and come up with a better framework for you. And I'm going to start talking a little bit about why I think it's a dangerous thing. So the reason I hate faster, better, cheaper is that there are people out there who have more resources than you do as a startup. So if Kayak or Travelocity or pick your favorite decided to come after you, David, they're going to have more resources to try to put whatever it is, the tech behind what they do. And so there's probably something in your secret sauce that is more than just faster, better, cheaper. Maybe it's something that's defensible. Maybe it's some IP. Maybe it's something beyond the tech. It's a network, the way you actually connect to people to get the data for your airfares. There may be a whole bunch of things. But in the end, we want to make sure that you end up there. And here's why: If you can get to what we call a 3D breakthrough, something that's truly disruptive, truly discontinuous, and really defensible, then you as a startup have a chance, even with small resources. In fact, it's the story of why startups succeed is that they make these big breakthroughs. They punch through the noise with something that's just completely disruptive, like a business model. Like Google had to use advertising instead of selling software to give away their office suite, where Microsoft was having to get you to pay for it. It was totally disruptive. It caused Microsoft to be a dial tone as a stock for many years. That's what we mean by this. So let's get into these 3Ds and see if we can identify some for you.

So first of all, disruptive is, as I said, sometimes a technology, but often a business model. Like Airbnb changed the travel industry. They didn't actually invent anything. They don't even own the homes that you go and visit or the places you go and stay at. What they created was a means to connect people and give them experiences by sharing resources that other people were not using. Genius, right? That could have been invented sitting here tonight. And that's one of the things that's so exciting about business models is why we spent time on it last time. But then there are also technologies. So I would argue multitouch as one of these. Multitouch was such a game-changer because the minute you could use that interface, now instead of having to have a dedicated user interface for every single thing you did. So remember that example of in the operating theater, imagine if you had all the, all the instruments that you needed to, uh, work with on a one single interface that could change during the operation as you were going through various different stages of it. I'm describing a real thing, by the way, as opposed to you have to go to every single instrument, learn that interface, and figure out when you go and find, you know, how to use it. No, it just flows for you. And actually, it's monitoring the patient in real time too, so you can actually see what you need to spend time on, where you need to focus. That's what multitouch did. It can save lives. It's that critical. It's not just for playing games on phones. But by the way, it's a very big industry too. So, uh, that's what we want to try to have you find. So that's what we mean by disruptive.

Now, I'm going to use an example. Was Amazon a disruption when it first came out? No, no. Why not? Because Tesco did the same in the UK. Was the first in the United Kingdom who did e-commerce, to my best knowledge. Okay, very good. Anybody else think it was a, not a breakthrough? Nothing new in the way of products? But why is, why is the success of Amazon then, uh, been so great? And by the way, I want to hear why you think it wasn't like a breakthrough too. I'm just as interested. Somebody over here, I think said it wasn't. Yeah, go ahead, David. Well, I think Amazon, because just of the success in marketing, right? Or just being user-friendly, you know, just getting to the customer. Because what I, what I'm discovering is a lot of these big companies that people kind of like, in a way, idolize, just older ideas that other people had before. Yeah, you know, that's all it is. There's nothing really new, but they just happen to blow up and everyone knows their name. Okay, so they became bigger. They had more scale. They became faster. They became better. And they became cheaper. Convenience, which is why it's really dangerous to try to compete with them. Yeah, but yet they succeeded. So I would argue the, the reason they succeeded was, and there was in Jeff Bezos's quote, you all see this, these trucks driving around. No other business gave you these two things. It wasn't, "Do you want low prices or do you want fast delivery?" You can have both. By the way, there was actually a third, if you read his quote, just to go backwards, which was choice. And in fact, it was, it was how they first got going. Amazon succeeded as a bookstore to start off with because you couldn't get access to the long tail of books that people wanted, literally physically. You couldn't get access. You had to go find those books in bookstores. And suddenly they said, "Nope, we'll find you any book on the ISBN code or whatever it is in the world that you need to get access to." So it was, was first and foremost selection. But then when they really focused in, it became actually not even selection, but fast prices. I mean, sorry, fast delivery and low prices. So it is actually a breakthrough. It's a breakthrough that they managed to do because they built huge scale and they got the economies of scale to put behind that. It's also a fascinating example for another D. So that's the disruption. They first had it.

It was discontinuous. What came next? Discontinuous is something that you couldn't do before. This next thing? What is that? AWS. AWS cloud computing was invented by Amazon. And why did they, why were they able to invent it? Because they got such scale in their operations that their compute resources became accessible at a price that was so marginally, uh, efficient to sell to other people that now people could start using the cloud, as it became known, as a basis to build their own business. They rented their, if you will, their hardware infrastructure, their storage, and their compute to people who wanted to use it. And they had such economies of scale that it was actually extremely effective for them to do that, by leveraging something they'd already built, the huge data centers, etc., to do that. That story, by the way, was told right here in this iLab by the guy who got behind it, well, actually created it, Andy Jassy, who's a donor to this iLab. And it's an interesting story to listen to. So it's something that started out as a disruption, it became a discontinuous innovation. It gave rise to cloud computing. Anybody here using the cloud? I'm sure TerraFlow must be. Yeah. Almost all of you are. Huge game-changer. I mean, and what's interesting about it, and this is where I want you to think about discontinuous things, is you couldn't do certain things today without the cloud. So pretty much everything we do on our mobile phones, couldn't do without the cloud. And anything that you're thinking about in terms of, for example, how we solved this problem of working after COVID, how would we have done that if we hadn't had the cloud? We'd have all disappeared and been unable to communicate and connect and do Zoom and all those other things. So these are discontinuous innovations. That's what those things are about.

And then finally, the third D is, how does it become defensible? So there are lots of ways things can become defensible. Here are a few examples. You can have great IP. That's the typical one. Some breakthrough innovation. So I'm going to guess here that Dan, you would say something about TerraFlow is going to be protectable as IP. Am I right? Yes. Okay. And are you going to go after a patent for it? Perhaps, even possibly, possibly. So if you don't, is there some effect that you think you'll have that will cause customers to get to say that, "Hey, we will not take TerraFlow out of our business once we've got working it, uh, got it working with us"? Will it become part of their end-to-end way that they bring drugs to market, for example? Yes. Okay. And once it does, will they take it away? No, because it's the way they're used to interpreting the data and communicating internally. So that gets to what I call switching costs. It's a whole discussion at, uh, MBA level that we talk a lot about. Once something becomes adopted by your customers and it's proven to be very effective, it's really difficult to take it away from them. And actually, I will say the same. Keep using the same example. If I gave you a brand new, spanking, you know, best-in-class phone, but I told you you had to give up your phone number for it and you had to change carriers for it, would you adopt it? You would not. Okay. Most people would say no. There are a couple that say yes. So it's not an, an always absolute thing. But the point is, there are switching costs associated with everything. Similarly, like if I said to you, you could go to another university, but it doesn't teach your course. Well, of course, even if that university is way less expensive and maybe easier to get to, it doesn't teach what you need. So it's what you're being delivered and how you're being delivered it, and how difficult it is to adopt it, that is important when you start to think about defensibility.

So think about network effects. Think about switching costs. Think about IP. Think about things that give your customer a basis to work with you that causes them to say, "I wouldn't want to switch. I wouldn't want to go anywhere else. This is something that I've got used to." And then my favorite example of this is as follows: If I came up with a much better social network, like you loved the way that you could post photos, it was way easier, but nobody else was on the network, would you adopt it? Of course not. There's nobody to share anything with. That's why there's such huge defensibility in the networks that have been built, like Instagram and WhatsApp, etc. So networks is, is a very good example of it. And then data is a fascinating part of it. So, uh, Vivian's building an actionable data product for marketers. If your data gets broadly used everywhere and more and more marketers contribute to it, so it becomes better and better, what's your competitive advantage? In what's your moat? That I am going to be the person who understands the human face the most. There you go. You will have more data on why people are doing things, what it is. And by the way, uh, what Vivian's doing is really fascinating. She's giving people the ability to read what it is that users are responding to. And if she has better data on that than everybody else, guess what? That's incredibly powerful for marketers. And the more people that use it, the more data she'll get, the stronger her network effect will be, the bigger her moat will be. You're nodding, but I'm, I'm making this up as I go. Is that true? True. Good.

All right. So now it's your turn. I want to have, uh, each of you take your value prop and tell me what you think could be, I'll go back to the 3Ds, defensible, disruptive, and also discontinuous about it. And let's help you to all do that. So I'll walk around and make sure you do it. So get your 3Ds up and let's get some, uh, help for those. I'm going to just tell you that everybody's coming up with very good, um, 3Ds. So first of all, I was most surprised by Taste of Kenya because consumer products are very difficult to create, create defensibility with. But, uh, Zapora and her team have got a great answer to this. And if I get this wrong, tell me. They've got 10-year contracts that they're writing with people, which is locking them into a situation. Sorry, go ahead. Yeah, with the farmers. With the farmers, which is locking them into a place where other people won't be able to compete, as I understand it. And then over here, I was really excited when I heard a little bit about Space Health. And why is it disruptive? Because of space. It's new and scary. We're always going to be going. Pretty obvious. Space in of itself is a whole disruptive industry. It like changes the notion that we're actually bound to our planet. Very disruptive. And it's actually becoming an industry because of that. And there are whole bunch of things that are changing because of the fact that we can access space. Very, very interesting. I mean, we're, we're thinking about all sorts of new industries as a result of that, new materials that we might create, new forms of, for example, life that we might explore, etc. So it's very disruptive.

Okay, so I was also very excited when I heard about Cohort. First thing I heard from them about what's disruptive, sorry, discontinuous, is what used to be in education, an analog, is now being turned digital by them. That's a great example. Very disruptive. Things going from analog to digital. Perfect example of discontinuous, uh, a discontinuity. All right. Then we came to Sharon's new bike seat. I was thinking, "Oh, bike seat, that can't be that, you know, defensible." But then I heard that what she's doing is actually measuring all the data in use while the bike seat is being ridden, and the form of the bike seat is changing on the fly as a result of that data. Now, the question that I didn't get to hear is, why is it defensible? Uh, defensible IP with the technology? And then the other thought was, like, long-term contracts with bike share companies. Don't you think your data will become defensible at some point too? That is as well. And it's important because women specifically, in a lot of issues, but in bike health issues, are understudied as well. So there's actually not enough data about that. Great. All right.

So I could keep going around the room, but just for time, I won't. I will encourage you all now to start thinking about instead of talking about better, faster, cheaper, what do you do that's disruptive, discontinuous, and defensible? Because that's going to set you up for success. And look at all the great ideas you have. You've all got a great basis to go defend your business and to, to make it really stand out in this breakout way. So well done. Very, very exciting.

Okay, so we're on to the last leg, and this is the piece that hopefully will help you decide whether you've got a business that's worth pursuing. And that's how you evaluate it. So your business or your value proposition needs to be something that is going to last and endure and be sustainable. And so there are only a few frameworks here, but they're quite important. The first one is something I've already been testing with you as we've been going through this evening. What was the situation before your product, and what is the situation after your product? So, for argument's sake, Celine Health. If people don't get any cure for the challenges they address in with going through menopause, they're going to be out of work a lot and dysfunctional a lot, and they're going to obviously have personal health issues on top of all of that that may lead to other complications in their life. So that's pretty clear what the before is. The after is, what would you say? Higher productivity among those women. They just function normal and give back their life, like a high quality of life they should have. So literally, you could say acute pain or absolute joy. And there might be a whole bunch of other things that you might expound on this. And I'd encourage you to really go to the absolute extreme if you possibly can. Say, if they're mothers, for example, that they might be able to, uh, look after their families and sustain their, their, um, livelihoods as mothers, etc. Or if they're workers, obviously that they're, you know, they're supporting their community, etc. There's a lot of things that could, could be great if they get their health back, whereas if they don't, they're dysfunctional in their, their situation in life. So try to bring those things out.

The other interesting thing about this is where you get challenged is, um, when you are a consumer product. And I, I put, uh, Taste of Kenya up here, which is sometimes people will say, "Well, it's nice to have. It's like a vitamin versus, you know, a morphine." So I have a question for you, because I know you've got the answer, which is, why do you think the before and after in, you know, Taste of Kenya is so powerful? So to the farmers, if we don't serve them, they're going to cut down their coffee trees. So coffee is going to be extinct in Kenya. For the consumers, they're never going to have to drink, ever going to get to drink, and coffee. Okay, so it's pretty much a national issue at some level, the way you just described it, which is great. So anyway, the before and after, we want to make sure that you can say it in a way that this is something that's not a nice to have vitamin, but it is really a necessary penicillin or morphine or something that is actually vital to their health. Now, it's not always going to be the case, but the more you can define it in those terms, which is so critical to people, they say, "Okay, yeah, I've got to have that," then the more likely you are to be able to say, "Great, I'm onto a good track."

So just because I'm, again, going to keep us on time, I encourage you to just do this as a T diagram when you're doing your, um, your value prop. Just do the before and after. And you can do that anytime, obviously. Very easy exercise to do. The more you can speak to your customers, again, back to this whole approach to, don't ask this in a vacuum. Speak to your, your user, your customer, and say, "Tell me all your problems before." And remember, you want to get them to list those all as long as you can. And then, if we deliver this for you, what will it look like afterwards? What will be all the things that you'll be celebrating that you can now do that you couldn't do before? Whether it's getting your health back, or it's whether it's drinking your favorite coffee, or whether it's being able to, for example, get access to the engineering talent that you didn't have before, or whether it's making sure your data actually is delivering the right insights that you need, as in low. There are all these things that you'll be able to do. And that's critical to put out on your value prop. Make sense?

One question: How do you actually make sure that that is something you could measure? That's what this next framework is. So the gain-pain ratio is incredibly simple and yet very powerful. And what it is, is it's measuring the gain you deliver to your customer versus the pain for them to actually adopt what you do. Now, I'm almost certain that all of you could tell me all the gain that you deliver. But I'm almost certain that you probably couldn't tell me all the pain and the challenges of adopting it. So let's talk you through an example. So how many of you use Venmo? Great. Me too. Became really obvious to me that first of all, you know, just sending money to pay for basic things and services. Why on earth would I write a check ever again? Totally the most dumb thing. It's become so convenient. It was very easy, uh, to use from the minute I started using it. However, it wasn't always that way. And the pain that, uh, first went on as Venmo got first adopted was, it was yet another app for users to use. They had to connect it to their bank, and they weren't sure whether it was really secure. And to start off with, not everybody had it, so it wasn't really that useful because the network didn't exist. And this is sort of the cold start problem that a lot of you might have with your idea. So you got to think about all of that. And you also got to remember all those things.

So here's my tip for you, which is super easy, which is when you go to talk to your customer, don't pitch them your idea. Again, ask all the reasons why they have pain. But then ask them this one question: "What are all the reasons you would not buy my product?" So why would you not buy this product? Tell me all the reasons. And keep asking that question over and over and over again until you get them to tell you all the pain points they would have. I can give you a clue about some of them. Number one is, "Well, I don't really need it that badly." So guess what? I could use the alternative. Well, that's a bad starting point. So you're going to have to figure out, you know, why and what is it that they don't like about the alternative that actually, if you gave them something way better, they might use it. The second might be cost. That's always an easy excuse. But then there's other things that are not so obvious, like, for example, training. How do I retrain people to use this new approach to doing things? Or if you're selling a bike seat, might be as basic as, "Well, my supply chain is already in place, and I don't want to change and disrupt that. It's too easy for me to just buy all the component parts. They're already cheap." And you'd slow it all down if I had to design this new bike seat in and get all this new data, you know, flowing into this this new device. And that'd be a new complication for me to worry about. How is that all going to fit with this thing I sell already very effectively called the bike? I'm making it up, but it's the kind of thing you want to pull out before you, you know, end up saying, "Okay, I've got my value prop nailed."

So let's keep going with the Venmo example. The other thing that's always there as a startup in the middle of this equation is inertia and the risk of you as a startup being something that a customer is going to rely on. So, "Do I really need this?" is one of the things. But also, "What happens if I put my money in this network and this startup fails? I just lost whatever money I was sending to people." That's a huge risk. People don't want to do that unless they feel like, "Oh, this is like bank-like security." So these are things that you have to think about upfront. By the way, there's some things that, you know, these products often don't think of initially, such as, "Well, how can I split the bill and do the tips?" Venmo figured that out and eventually they got through that issue. So whatever it is that you have, assume that there's a reason why people will initially resist you, even if it's just that you're a startup and they don't want to take a risk on you. And think about how you'll overcome that.

So now the question is, what's the right ratio of gain to pain before somebody will take a risk on you? Anybody want to take a guess? Yeah, go ahead. No pain. Well, that would be awesome. So it'd be infinite. So your ratio is infinite. I love it. All right, go ahead. Ten to one. Why ten to one? Because you got to get people over that activation energy, yeah, to make, get excited about your product and make it a priority. Yeah.

So what's interesting about bigger, faster, better, sorry, cheaper, better, faster is, do you think 30 to 90% cheaper is going to cause people to do something to change? How might they might use, for example, that travel? And would it cause David's business to take off? We're not asking David, so we're asking you. Anybody? What does anybody think? Yes. Yep. I would say for certain users, it would. Yeah. So why? I always say this, there are not answers here. I would agree with both viewpoints. So for certain classes of user, for example, if you are selling to a pharma company and they're, you know, doing experimentation, I would say 10 to one's probably right because it's very expensive for them to go change their workflows to to develop new drugs. But for a consumer, if you can offer a 30 to 90% cheaper solution, David might really be onto something. I would want to send, you know, save that money. Maybe even 10% would be enough of the threshold. Maybe not. Maybe 20. Maybe anyway, you get my point. You've got to measure this, and you've got to ask your user, and you've got to be clear what's the threshold for you on the gain-pain ratio where you would make a change that would make you take the risk and get over the inertia. That's why this is such a useful formula.

Can I ask a question about that example? Um, because I feel like there's the pain of maybe like switching platforms you normally use to look for travel, but it strikes me that with that particular example, there's another pain of changing the way you travel because you're not putting in a destination. So I'm wondering how you think about those two? Because one seems like more a longer-term shift that you're trying to prompt.

So I'm going to let you and David debate that afterwards because it's specific to him. But the principle though, is still the same, which is what you're asking David to do is say, David, why would I take this risk and why would I use your service versus what I'm already doing? And I'll give you an answer that I think is important to sort of use in a general, uh, sense so that it's not about David's business, which is, if the customer has something that they're comfortable with, and you really are not giving them at least an order of magnitude improvement in something or a significant gain in something, they're not going to do anything. Life's too short. They're too busy. Rather just carry on doing whatever they're doing. The greatest inertia and the greatest reason that people fail is because they're not solving a valuable enough problem that where the gain-pain ratio is big enough that somebody will make a change or that'll adopt something. And it can be on either side of this equation too, by the way. For example, let's use a case and point that we've all experienced, which is it's incredibly easy to download an app. It's point, click, download the app. So that pain, if you will, of trying something is incredibly low. But then if you start using it and it's no good, it's also incredibly easy to just point, click, delete. So you've got to find something that is really valuable on a sustainable basis for somebody. And ideally, make it so easy for them to adopt it that it's going to be a very successful go-to-market motion for you when you start selling it. And that's what this pain and gain ratio is all about.

So by the way, Venmo mode did some very clever things. They added all these security measures. They made sign-ups so easy. For example, you could just scan a QR code to pay it in certain situations. And there are a whole set of things that became obviously so simple that we've all adopted it, and it's now friction-free. And because the network's there, we talked about that too, it's obviously got huge defensibility because nobody else is going to just disrupt that because all the people that you already pay on Venmo, it's just one click for you to pay them. Obvious stuff, right?

So let me make sure that you get a clear idea of what are the things to look for on gain-pain. So first of all, on, on, uh, the gain is pretty obvious. You know, how much money do you make people? How much time do you save them? All that stuff. You're going to, you're going to nail that. I know that's not the problem. On the pain side, don't forget how you are going to have to help people find you, try you, buy you, adopt you, get trained into your system, and everything else that's associated with owning you. All of that is pain. All of that has to be factored into your gain-pain ratio. And in the middle, don't forget all these things that are associated with what ultimately come down to risk and are inertia for people to change anything. If you do that, you have the basis to evaluate your value prop. And you're in the power seat at that point because you can keep telling yourself your thing's great, but until you see that tipping and customers are pulling you to market and saying, "Yep, this is really something I've got to adopt," you know, you haven't got it right.

So, uh, TerraFlow was easy for me to, to, uh, pick down. I would say you have work to do on your, your game plan, cuz the way you expressed your value prop is very clear. Like for, you know, translational scientists. We know the who is for with traditional R package, you know, R is a, for those of you who don't know, hugely widely adopted language that's used for statisticians. Due to you haven't quite got the unmet needs yet. That's great. You'll probably can figure that out. I might say, based on what I've learned, the inability to gain the insights necessary to define the data, data path for them. TerraFlow offers the platform but allows scientists to extract clinical breakthroughs. Now, you're going to have to decide how will you declare that as at least an order of magnitude, since that's the term you came up with, better than the alternative of doing nothing, because otherwise they will do nothing. Make sense? Okay, good.

So I will just simply say we got to the end naturally, otherwise, which is, you already know where we're headed. I already told you what the value prop is. I gave you the statement upfront. Now, what I'm going to just, just put it all together for you, which is this value prop statement is actually built by all the frameworks we just took you through. And again, this is in the workbook. So the four Ps: defining who it is for, use this minimum viable segment. Again, that's in your workbook. I drew it very briefly here and talked about how do you find the same needs that you can address with your, uh, first product? Don't get pulled all over the place. Find a set of users for whom you have the same needs, your minimum viable segment. Check that they are blatant and critical needs, ideally rather than latent and aspirational. That's the black and white framework. Or if they start latent and aspirational, be clear how you're going to get them the question that Victor asked, from just using something that was just a basic platform, a basic product like an iPad, to a place where it becomes mission critical. And then how do you define what's urgent and underserved and unworkable, etc.? That's the for use. If your audience tells you that, if your customer tells you that, then you know you're dealing with the right customer and you've identified the right pain points for them. Same with what are they dissatisfied with? Things that are unworkable. If they really are unworkable, they're not going to put up with it. And if they're underserved, in other words, they're not being able to get, for example, the coffee they need, or for example, the comfort they need, or the travel access they need, or the safety they need, or the health they need, etc., then spell that out. That's where it'll go in your value prop. And then don't just say it's faster, better, cheaper. Tell people why it's disruptive and it's a discontinuous innovation. It's gone digital as opposed to used to be analog, or it's now online and accessible. And then it provides something which you want to make sure they are very clear is an order of magnitude breakthrough. And that's where you use the gain-pain ratio. You don't just say it's X, you say it's 10X. And here's why, because for you to adopt it, even with the pain of, you know, retraining, etc., you're going to get this enormous gain that is compelling. And then finally, it's unlike the things that at the moment are also unworkable for one reason or another, or are not addressing your need, or underserved. It's your value prop.

So with that, we're finishing one minute early. Now, any questions before we wrap up? Yeah, go ahead, Zora. Could you please walk us through the black again? Yes. So a lot of products might start out as being something that in this framework, uh, latent and aspirational. In other words, people would like to have this. These are nice to have. But really, where you want to get to is a place where it's blatant and critical. So this is a must-have. So I don't need to tell any of you this, but all the things that are subsistence for you are must-haves: food, water, health, anything that enables you to do your job. They're all must-haves. All the things down here like, well, depending, anything you like, but you know what you spend your money on is your business. But entertainment might be a nice to have in certain circumstances compared to health. It's pretty obvious to state that. Or, um, fashion might be a nice to have versus comfort. I mean, versus, um, you know, it's winter in Boston, so, uh, things that protect you from the cold. I mean, there's just basic ways to define things that are nice to have versus must-haves. The more you can understand how you move from the nice to have to the must-have, the better. Does that make sense? Great.

Okay, so I'll let you come up and ask any questions you like, but I want to finish now on time. So thank you very much for for joining in on this. I will say that the most important thing in all of this is that it's built around you. So if you don't uniquely understand the problem you're addressing, then why are you doing it? Because you're going to face a lot of competition from people who do know better than you. Which case, what can your solution deliver uniquely well? Is what we've been spending all this time on. Based on what you know, that also can be built around you. And finally, if you can bring that all together around what we talked about last time, around a disruptive business model, then it's going to be sustainable. And so this is often times what what people refer to as product-market fit. It's why you are uniquely in a position to solve this particular value prop and, and do it in a way that is sustainable with a business model that we talked about last week. So in summary, have fun defining it. Have fun evaluating it. And make sure it's built around you, and you'll have a great company. Thanks very much. Being a pleasure.

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